This Brilliant Chart Reveals How Patience Pays Off For Investors

When first introduced to investing, people are often told that
the stock market offers around 10% per year. Meanwhile, bonds
offer a mid-single digit return annually.

However, these average numbers rarely reflect what'll happen in
any single year. In fact, it's actually rare to see the stock
market return 10% in any particular year.

But on an annualized basis, historically, the market is more
likely to deliver these average returns the longer you hold these
investments.

This eye-opening chart comes from JP Morgan Asset Management. It
shows the range of returns on an annualized basis for stocks,
bonds, and a 50/50 stock-bond portfolio over 1-year, 5-year,
10-year, and 20-year periods. The returns data is from 1950-2013.

As you can see to the left, the stock market gave as much as 51%
and took away as much as 37% in any given year.

For an investor with a minimum 5-year investment period, a
portfolio of stocks would've done no worse than -2% on an
annualized basis while offering a return of up to 28% using the
same calculation.

If you extend the holding period to 20 years, you'll see the
worst you would've done is +6% annualized while getting +18%
annualized in the best case.

The average annualized returns for stocks during those 20-year
periods: 11.1%. That's very close to the 10% we're taught as
kids.